April 25 (Bloomberg) -- The U.S. Treasury Department may
have more time than economists previously estimated before the
government’s debt limit is reached as changes in tax policy and
an economic rebound boost federal revenue.

The date the nation hits the ceiling on borrowing could be
pushed back as far as mid-September to Sept. 30 from a previous
estimate of late August to mid-September, Steve Bell, senior
director of economic policy at the Bipartisan Policy Center in
Washington, said in an interview.

A later deadline would give Congress more time to debate
lifting the cap and postpone any vote until after the August
recess. President Barack Obama in February signed legislation
suspending the $16.4 trillion debt limit through May 18. The
Treasury uses so-called extraordinary measures to push the
deadline further.

Treasury Secretary Jacob J. Lew said last week Congress
should “extend the debt limit to remove any uncertainty” and
declined to estimate when the ceiling would be reached.

“A solid economy is certainly part of the story,” said
Lou Crandall, chief economist at Wrightson Icap LLC in Jersey
City, New Jersey. “Underlying fiscal trends are somewhat
stronger than I had anticipated a few months ago.”

As a result, the Treasury is likely to have “a slower cash
burn rate this summer than originally seemed likely,” he said.

Receipts in the six months through March totaled $1.2
trillion, up 12.4 percent from the October-March period a year
earlier, according to Treasury data.

Stronger Revenue

Individual income-tax payments advanced 14.7 percent, while
corporate profit taxes gained 18.6 percent, the data showed.
Those two categories accounted for about 55 percent of total
revenue in the first half of the current fiscal year.

Government spending totaled $1.8 trillion in the six months
through March, leaving a fiscal year-to-date deficit of about
$600 billion, the data showed.

Nancy Vanden Houten, a policy analyst with Princeton, New
Jersey-based Stone & McCarthy Research Associates, said in an
interview that more than half of this year’s higher revenue is
related to expiration of the payroll tax cut at the end of last
year and “some shifting of income to avoid higher tax rates in
calendar year 2013.”

A smaller part, perhaps three to five percentage points of
of the 12 percent jump in receipts, “reflects underlying growth
in the economy,” she said.

Political Issue

The debt limit is one of the thorniest political issues in
Washington. In 2011, the Obama administration and Republicans
debated for months before raising the ceiling in August of that
year. Standard & Poor’s downgraded the U.S. three days later,
citing political gridlock in Washington and the nation’s long-term fiscal challenges.

U.S. Treasuries rallied afterward, with the 10-year note
yield touching a record low 1.379 percent in July 2012.
Benchmark 10-year notes yielded 1.72 percent at 12:10 p.m. today
in New York.

The Treasury in 2011 staved off a debt limit breach for
about three months by taking steps including declaring a “debt-issuance suspension period” under the statute governing the
Civil Service Retirement and Disability Fund. That allows the
U.S. to redeem existing Treasury securities held by that fund as
investments.

The U.S. unemployment rate has declined to 7.6 percent in
March from 8.2 percent a year earlier, and the S&P 500 Index has
increased for the past five months.

Tax Changes

Lawmakers let marginal income-tax rates increase on taxable
income of married couples above $450,000 and individuals above
$400,000. Those changes increased the top tax rate on ordinary
income to 39.6 percent and raised the top tax rates on capital
gains and dividends. The law also reimposed limits on itemized
deductions and personal exemptions for top earners.

Fannie Mae and Freddie Mac may also contribute to extending
the debt limit by sending profits to the Treasury in June. Such
a decision by the government-controlled mortgage companies “is
a big wild card that could change the timing of the debt limit
by quite a bit,” Vanden Houten said.

The debt limit will increase on May 19 to account for the
deficits that accrued during the suspension period. The Treasury
will have to use its extraordinary measures unless the limit is
raised or suspended again.